China’s central bank added 5 tonnes of gold in March 2025, hitting a record 2,292 tonnes, while secretly buying 50 tonnes in February, per Goldman Sachs. As China dumps U.S. Treasuries and stockpiles gold, whispers of a looming trade war grow louder. Could these developments shake the global financial order—and where does crypto fit in the chaos?

Shocking Signs China’s Bracing for a Trade War Explosion

China’s financial maneuvers recently suggest a strategic preparation for economic turbulence, potentially in the form of a trade war.

One of the clearest signs is the country’s systematic reduction of U.S. Treasury holdings. According to FXStreet, China offloaded $22.7 billion in U.S. Treasuries in February alone, a move that raises questions about who will fund the U.S. government’s borrowing spree as foreign investors like China step back. At the same time, China has been aggressively accumulating gold, with the central bank PBoC (People’s Bank of China) adding over 300 tonnes to its reserves since October 2022.

This trend of selling U.S. debt while stockpiling gold indicates a deliberate shift away from reliance on the U.S.-dominated financial system, possibly in anticipation of trade tariffs, sanctions, or other economic retaliations.

The PBoC reported its third consecutive monthly gold purchase in January – Source: State Administration of Foreign Exchange, World Gold Council

Another telling sign is China’s apparent effort to undermine the dollar’s global hegemony through gold. By accumulating gold, an asset that cannot be frozen or devalued by foreign powers, China is positioning itself to weather potential financial sanctions, similar to those imposed on Russia following the Ukraine conflict.

Moreover, there are discussions of a gold-backed BRICS currency, which could challenge the dollar’s dominance in global trade. These actions suggest that China is preparing for a trade war and laying the groundwork for a broader restructuring of the global financial order.

What China’s Bold Moves Really Mean for the World

China’s actions speak to a multifaceted strategy aimed at both defense and offense in the global economic arena. Defensively, gold serves as a hedge against inflation, currency devaluation, and geopolitical risks.

China’s gold accumulation helps protect its reserves from the eroding effects of a weakening U.S. dollar, which could result from escalating trade conflicts or broader economic instability. Offensively, China appears to be positioning the yuan as a viable alternative to the dollar.

By increasing its gold reserves and potentially re-pegging the yuan to gold (even symbolically), China could make its currency more attractive to the Global South and BRICS nations.

Additionally, China’s recent policy changes, such as allowing insurance companies to invest in gold, signal a domestic push to bolster gold demand. If expanded, this could lead to an additional 500 tonnes of gold demand, further solidifying China’s grip on the global gold market.

Crypto Caught in the Crossfire—Will Bitcoin Soar or Crash?

The crypto market, specifically Bitcoin, is facing a critical juncture amidst this economic turmoil. According to Swan Bitcoin, global economic uncertainties, such as excessive debt levels, currency devaluation, and geopolitical tensions, create a favorable environment for Bitcoin.

As China and other nations reduce their reliance on the dollar, investors may increasingly turn to decentralized assets like Bitcoin as a hedge against fiat currency risks. Max Keiser’s prediction of Bitcoin reaching $200,000 in 2024 may seem optimistic, but the underlying logic holds: as trust in traditional financial systems wavers, capital could flow into cryptocurrencies.

BTC has seen positive signals recently – Source: TradingView

However, the crypto market’s reaction may not be uniformly positive. Bitcoin, often dubbed “digital gold,” could see increased demand as a safe-haven asset. On the other hand, smaller altcoins might face volatility. Regulatory uncertainties could lead to panic selling if governments crack down on crypto in response to shifting financial power dynamics.

Additionally, if a trade war escalates, risk-off sentiment might initially drive investors away from speculative assets, including altcoins, while favoring more established cryptocurrencies like Bitcoin.

Read more: JP Morgan: Investors Prefer Gold Over Bitcoin as a Safe-Haven

In the long term, the flow of capital into crypto could surge as nations and individuals seek alternatives to the dollar-based system. A gold-backed BRICS currency might even inspire the creation of gold-backed stablecoins, bridging traditional and digital finance. For now, the crypto market continues to be a speculative battleground, with Bitcoin likely to benefit most from the uncertainty fueled by China’s actions, while smaller tokens navigate through more turbulent waters.

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